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Customer service as branding nightmare: when Panda Express employees pull out their switchblades

Tim Tom and Kevin
I guess Panda Express will be replacing their panda bear mascots,Tom Tom and Eddie, with Tim Tom and Kevin, no?

Because I’m yet again putting the finishing touches on my customer service bestseller (yes, you will buy the book and you will buy many copies), I have dozens of loose leaf notebooks filled with customer service stories, from downright heroic to Blair Employee Project terrors. I have so many OMFG (“Oh My God!” — I forget what the F stands for) stories in my scut file that I could kidney punch you with them from here to next week. The superhuman levels to which employees (and business owners) can take bad customer service are mighty testaments to the sheer perverse genius of the human race. But, I have to admit, none of these hair-curlers involve an employee threatening a customer with a switchblade. That, my friends, is a first in my experience. And it took our cuddly friends, Eddie and Tom Tom, at Panda Express to bring it to you.

Think of this from the perspective of Panda Express senior management. Put yourself in, oh, I don’t know, the Marketing VP’s shoes for a second. As far as branding is concerned, drunk employees with the Panda logo pasted all over their clothes and brandishing knives on total strangers is about as crappy a branding strategy as you can possibly dream up. Okay, sarcasm is, I acknowledge, the lowest form of humor, but why was that person even employed at Panda? When you hire someone and dress them in your logo, don’t they become brand ambassadors? If you meet them on a bus or on the street and they’re wearing Panda work clothes, aren’t they still “on duty” as brand representatives? Don’t they consider that in the hiring process?

It turns out, by coincidence, that the very first section of my customer service book dealt with precisely the problem that plagues the hapless executives at Panda — why they have employees that like to get roaring drunk in their Panda uniforms and threaten innocent bystanders. And, the coincidences multiply, I originally titled that section, “The Panda Problem,” because I arrived at this insight after a particularly untoward customer service experience at Panda Express (I really like Panda Express, but the problem they have is, well, the Panda Problem). I’ll give them this: the folks at Panda originally lit the customer service bestseller fire under my feet and have now provided me with the Academy Award winning customer service story of the century.

Alas, I eventually changed “The Panda Problem” to “The Denny’s Dilemma” because Denny’s fit the didactic shoes more snugly. But in this final, final, last, final go-around, I realized that this section still didn’t get the point across with enough oomph, so I made some major revisions and hopefully hit a home run: it’s now called “The Ross Employees For Less Golden Rule.” And less than one day after putting the final touches on this section, a staggeringly drunk Panda Express employee whips out a switchblade on me. “Damn,” I thought as he glared daggers at me, “I should’ve left that section as The Panda Problem, because this is what I’m talking about. A tad on the extreme side, admittedly, but still, this is what I mean when you hire for customer service rather than train for customer service.” (I tend not to have fear-filled thoughts in moments of great danger — when a plane I was on went into a straight-to-the-ground nosedive in the middle of in-flight lunch, the only thought that crossed my mind was, “Damn, I should’ve eaten the German chocolate cake first.” I’m not fearless, as some people say with great admiration, I’m just distractable.)

So, after the break, let me tell you a fun little story about how a Panda Express employee pulled a switchblade on me for no reason whatsoever (honest), why that’s a supremely sucky branding strategy, and then treat you to a few tidbits from my “Ross Employees For Less Golden Rule” in my must-buy future bestseller, “Customer Service IS Marketing: The Ten Commandments of Customer Service.” It’s fun, but it’s good for you, too!

Let’s start with last night. My little toddler, who has no fear, spent a good part of the day in the emergency room getting stitches for a cut he suffered in one of his all-too-frequent Evel Knievel moments. Since they had to sedate him, our emergency room visit turned into something closer to a day’s residency. Bopping home around 8 PM, we stopped to pick up some dinner. In the little strip mall we pulled up to, the choice was Panda Express or Una Mas — not quite next-door neighbors, but a couple stores apart. Opting for Una Mas (we had eaten at Panda the day before), we walked in and he insisted on sitting at a booth. So I stood in the order line, gave the order, and turned around to watch him ten feet away in the booth.

Out of the bathroom staggers this dude wearing Panda Express clothes (you can’t miss it, Panda Express logo all over his shirt). I figure he’s taking a beer break from his job two doors down. I don’t know, maybe he thought I was looking at him (I wasn’t), but he gave me a gangbanger scowl like that bald guy in Apocalypto. I ignored it, paid for my meal, and went to fetch a toddler stool. As luck would have it, the Panda-banger was standing (not sitting) at the table next to the highchairs with two mighty beers sitting at his table (he was on beer break from his job a couple doors down).

I lifted out a high chair and, giving me that gangbanger ass-busting look, he took about three unevenly directed steps toward me. It’s that eerily intense vacant stare that bullies give you when they want you to know that you’re next on the ass-kicking list. He nodded his head and pointed with his left hand at his right hip. I look down and he pulls out a switchblade and flicks out the blade.

When I said I’m fearless, I really mean it (I guess that’s where my three-foot Evel Knievel, Jr. got it). “Give me a break,” I sneered. Then I turned ninety degrees (the Panda-banger was about a two feet away at this point) and shouted to the Una Mas employee behind the register, “Why does this guy have a switchblade? Do you normally let crazy Panda people in here threaten your customers? And serve them beer?” I walked up to the register. “What’s this guy doing with a switchblade? Why’s he pulling it on me?”

Now, the employee behind the counter was a six-foot rips-phone-booths-in-half type of strapping young man, and he (talk about customer service) strode up to the Panda-banger (who was less than five and a half feet tall) and, in no uncertain terms, asked him what he was doing and told him to get lost. Panda-banger leaves, but not without giving me a few Maori warrior looks complete with four or five middle fingers.

“What was that about?” I asked the counter-guy. “I don’t know,” he said, “he just came in here ten minutes ago and ordered beers.”

So I called the sheriff and they came out, took my report, and, within about four minutes, found the Panda-banger passed out in front of Sam’s Club about a block away. When I talked to the Panda Express manager and told her about the incident, she knew exactly who I was talking about. He had been “sent home.”

Curious, that. She knew who I was talking about even though I didn’t describe him. If that’s the case, why is employed at Panda? Wearing Panda logos all over his chest and back?

Now, the title of my upcoming book is “Customer Service IS Marketing,” and by that I mean, customer service is positioning, messaging, branding, advertising — the whole ball of beans. What your employees do in front of customers is as powerful if not more powerful than all the advertising and branding fireworks you can pay for. It’s head-slapping simple: a seven dollar an hour employee can completely and permanently destroy all the work done in a seventy-million dollar branding and marketing initiative for at least one customer. So why, why, do folks at Panda and just about every other customer service operation get this so wrong? Why do they spend millions on branding and cut corners on customer-facing employees? Since customer-facing employees are multiples more important in branding that cute ads with cuddly panda bears?

You don’t need a Harvard MBA in marketing to realize that a Panda Express employee — in full regalia blazoned with Panda Express logos — drunkenly threatening complete strangers with a blade is, well, mighty poor branding. What, I ask, what was that idiot doing wearing a Panda shirt? Why did Panda hire this clown and trust him with their most prized object, their brand?

Well, it turns out that Panda — and everyone else out there entrusting their brand and their marketing to front-line employees — has a problem. And they haven’t figured out how to solve that problem (I have, because I’ve spent time with people who have). In the first draft of my book, I called it “The Panda Paradox,” after another incident at Panda Express. That morphed into “The Panda Problem” and then “The Denny’s Dilemma.” It’s now the “Ross Employees For Less Golden Rule,” and I’m offering you a first glance into a customer service insight so obvious, you’ll wonder why no-one ever thought of it before (they haven’t) or why nobody has really tried to really solve the problem.

The “Ross Employees For Less Golden Rule” is, quite appropriately, the cornerstone of the second “commandment” of customer service: “You never train for customer service, you hire for customer service.” So, without further ado . . .

The Ross Employees For Less Golden Rule

The most common pile of bullpoop littering the field of corporate no-speak is that ever-dependable plop, “People are our most important asset.”

You know the sentence and its variants. You’ve heard it more times than you can count.

It’s a nice sentiment if there was actually any air in that tire. That, of course, is what business no-speak is all about. Lots of sugar, no nutrition. Which is why business-folk are so addicted to it.

Now, really, if all those MBA, manager, and business owner types who say, “People are our most important asset,” really meant what they’re saying, how come you don’t find “people” or “employees” under assets in their balance sheet? Search high and low through their financial statements and their “most important asset” is nowhere to be found on the balance sheet.

So where are “people” and “employees” in the financial accounting of a business? Oh! Here they are! Employees, the company’s “most important asset,” are listed under “Expenses” in the Income Statement.

Curious, that. Who told these wunderkinds that an asset goes under “expenses”? And the company’s most important asset at that?

I like throwing cream pies at creaky corporate canards, but we’ve actually arrived at a startlingly noteworthy insight about customer service. Now, I’m not advocating that employee wages be moved from expenses to capital expenditures, thus effectively moving employees to the assets line of the balance sheet. I’m sure the tax authorities have nice, long-term accomodations for any business manager that tries this handy bit of creative accounting.

What I’m saying is that there is an unbridgeable gulf between “employees as assets” and “employees as expenses,” and that bridging this gulf is fundamental to creating a competitive advantage in customer service and, more importantly, a branding advantage in customer service.

Simply put, an “asset,” like any other investment, contributes to a company’s profitability. An “expense” takes away from a company’s profitability.

You got that? An asset is an investment. It produces a return, i.e., profit. An employee is an expense. An employee diminishes profit.

When business managers sit down and puff hot air about purchasing an asset, they always demand some “return,” or profit. That’s how they make a decision. It’s always an “expenditure-return” calculation. When business managers and owners look at staffing an organization, they determine that an “employee” has to do some necessary function and evaluate how that affects the company’s bottom line. How, in other words, wages and benefits cut into profits. It’s always an “expense-benefit” calculation.

And despite the oft-repeated, jejune, half-cheeked comments about employees being a company’s “most important asset,” almost all companies treat their customer-facing employees exactly the same way they account for them in their books: as an expense, not as a source of profit.

Think about it. If a business truly believed that employees were “assets,” wouldn’t they be asked in an interview how they would contribute to the profitability of the store and the company? (If you think that’s far-fetched, some of the best customer service organizations ask ALL their employees questions like that in the interview.) Why do prospective employees get asked mindless questions about teamwork and jobs they didn’t like?

As an “expense,” an employee is a “function,” a “job,” “tasks,” and a set of “skills.” But, as a source of profit, an employee is more than a job, more than a function, but a creative agent actively creating value for the company. As a primary source of profit, a customer-facing employee brings customers back. Customer-facing employees are the branding asset that, above everything else, produces brand and customer loyalty.

Got that? In retail and service organizations, “brand loyalty” is achieved almost solely through customer service experiences.

But companies never calculate the profits that front-line people make — and the primary profits they make are measured in repeat customers — but they do pay microscopic attention to how employees diminish profits. As a result, these businesses end up with employees that really don’t create brand value or profits, just employees that cost less. Indeed, the employees are profitable insomuch as the store makes more revenues than it pays in expenses, including wages. But the employees are not profit-creating. They don’t produce brand value and customer loyalty. And, more importantly, they don’t see that as their “job,” since, after all, that’s what they are . . . merely a “job.”

Worse, focusing on employees as expenses leads companies to chase down wages and benefits, which in turn leads to the fundamental and unsolvable problem that produces subpar customer service for most retailers and service companies.

I call it the “Ross Employees For Less Golden Rule,” after uber-discounter, Ross Dress For Less.

For those unfamiliar with Ross Dress For Less (Prada only, please), the discounter sells startlingly low-priced, often factory-reject clothing. You can, if you’re a serious penny-pincher, do failrly well for yourself. Most merchandise is middle-of-the-road quality, not junk, and quite a bit of it is high quality, but selling at Goodwill prices.

Everything about the store is geared to getting those prices as low as they can possibly go. Which includes, unfortunately, staffing the store with minimum-wage, benefits-deprived employees.

The consequence? On a good day, a Ross Dress For Less customer experience involves slow, dour, rude, slovenly, and heroically unsmiling employees in an understaffed, dirty, messy, clothes-on-the-floor store. I have shopped for two decades now at Ross. No employee has ever smiled, said hello, or said “thank you.” Register lines can be as long as 50 minutes — with only one person on the registers. Staff stocking inventory won’t let you pass — you have to walk all the way around them, go up another aisle, and return back down the original aisle to essentially move two feet forward. Clothes litter the floor.

If there was such a thing as “pride” in your work, it has gone on permanent vacation at Ross Dress For Less.

Why should this be? Ross is a great brand, has excellent merchandise, and the potential to be a first-rate discounter.

I’ll tell you why.

It’s called the Golden Rule.

You know the Golden Rule. “Do unto others as you would have them do unto you.”

Think about that for a second. It’s kind of relative, isn’t it?

Suppose you take a job at Ross Dress For Less. You get minimum wage and microscopic benefits — even if you’re a manager, you’re probably at minimum wage if you actually bother to do the math. That’s because you’re an “expense” and your presence in the store razors out dollars from Ross’s margins.

So where do you take your minimum wage after working a long, hard day at Ross? Do you go to Nordstrom’s for some mighty fine shoes and stellar customer service? Do you mosey on down to Fugo de Chao on La Cienega and eat a hundred dollar dinner with world-famous wait staff? How about Byerly’s for some premium groceries like mortadella from Italy?

No, you shop at WalMart. Food4Less. Payless Shoes. Panda Express. McDonalds. That’s what you can afford.

And how is the customer service at all those low-price leaders you regularly patronize?

Slow. Unfriendly. Uncooperative. Unsmiling. Rude. With long waits thrown in just to let you know how poor you are.

In other words, you, as a minimum wage worker, don’t get much in the way of customer service. As a consequence, you don’t expect much in the way of customer service. You can’t afford to shop at the places that spend the kind of money to consistently deliver good to great customer service.

You, an employee at Ross (or McDonalds or WalMart or Target), have the bar set pretty low as a customer.

“I don’t mind waiting in line 20 minutes at Costco,” you might say, “because I need to save money because I work for minimum wage at Ross (or Burger King or Old Navy). That’s the way it is.” So why should it bother you that your customers are waiting in line 20 minutes, even if you can do something to improve the situation? You endure, why can’t they?

If you’re poor and working for minimum wage, customer service is something you “endure,” not something you “enjoy.”

To quote William Faulkner: “the poor and the downtrodden of the world who endure and endure and endure tomorrow and tomorrow and tomorrow.”

“Enduring” customer service experiences is not what the distant, untouchable, and out-of-touch executives at Ross and Burger King and Target and Payless Shoes really have in mind for their brand.

Which is why the Golden Rule is a problem when you really think about it. If you have low expectations for the “do unto you” half of the equation, you’re not really going to deliver much on the “do unto others” part.

So I’ve amended the Golden Rule — let’s call it the “Ross Employees For Less Golden Rule”:

“Do unto others no better than they do unto you.”

The “Ross Employees For Less Golden Rule” is exactly why so many service and retail companies fail utterly at customer service. All the time, customer service experience after customer service experience. If employees are only expenses, a rational business is going to trim those expenses as much as possible. The more they trim expenses, the more they’re left with customer-facing employees who have low customer service expectations — and so deliver low customer service experiences.

And if you trim employee expenses down to the lowest possible level, you’re going to end up with customer-facing employees with the lowest customer service expectations.

And — this will be news to everyone except the front-line employees in a company — all the breakroom motivational posters in the world will never change that.

But the Ross Employees For Less Golden Rule is not a hard and fast rule. Spend just one week, say, in Japan, and you’ll find customer service experiences at the lowest service and retail end rivalling that at the highest end here in the States.

Indeed, as you read further in this chapter, you’ll find out that there are plenty of retailers and service providers who provide adequate to excellent customer service with lower wage employees. The problem with folks like Ross and Taco Bell and Sam’s Club is that hiring lower wage employees is all they do. Employees are “expenses” and “jobs” and they leave it to the breakroom motivational posters and underpaid managers to fix what they, with their Harvard MBAs, are supposed to be fixing.

In other words, the Ross Employees For Less Rule only applies when your customer-facing employees are only expenses for your business — that is, profit-diminishing “functions” and “jobs.” It has, in fact, nothing to do with how much you pay, but how and who you hire.

Some bright and dedicated managers and business owners have, in fact, managed to recast their customer-facing employees as “assets” — as profit-creators — as important as their brand, which, I hasten to add, customer-facing employees are the brand. When I say, as the underlying rule of this chapter, that you never train for customer service, you always hire for customer service, it starts with bridging that gulf between employees as expenses and employees as assets. Successfully bridging that gulf is the subject of our next section, “The Million Dollar Employee.”

If Panda Express really knew how to hire employees as assets or investments, angry, drunken Panda-bangers wouldn’t be pulling knives on innocent bystanders. The Panda employee that thought it was a good idea to threaten both me and my toddler was hired as a “job,” a “function,” a “set of tasks.” I have always made the radical suggestion that you never hire with a job description, which forces you to hire a person, not a “job-doer.” Employees aren’t functions or jobs or tasks — they are brand carriers, just like any advertisement, poster, or product name. And when your brand carriers are knife carriers, then you know there’s something seriously amiss with your hiring process.

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5 Responses to “Customer service as branding nightmare: when Panda Express employees pull out their switchblades”

  1. Kat says:

    Yet people still shop there. Ross is obviously making enough money to stay in business, so their approach, although pretty unpleasant for the customer, is working just fine for them. How can you convince them that treating their employees better will result in more profit? Why are they hiring for expense and not asset on the first place? Would they have to pay assets more? If so — round and round we go — what good would it do them when they’re chugging along quite nicely with surly, drunk, spiritless drones? If not, what the hell is happening?

  2. That is a GREAT question and one I get asked constantly when consulting or lecturing on customer service and marketing. In fact, I recently had a Panera employee send an angry comment to my post on Panera (I didn’t approve the comment out of respect for Panera) and he stridently threw the success of the chain as a counter-argument, even though I acknowledge fully that Panera is one of the most successful, high-growth food chains in our country. As is Ross — it’s doing fine, particularly because we’re in a recession.

    What he misses is what I’ve made the central argument of my customer service book — customer service is NOT ONLY about the customers you have, but the customers you don’t have. It’s not only about the revenues and profits you’re making, it’s about the revenues and profits you’re not making.

    In other words, it’s marketing. It’s about acquiring customers and about making more sales to the customers you have.

    Refusing to deliver on customer service is like refusing to advertise. You can successfully do business without it, but you do it because you want to do MORE business than you would without it.

    Since I brought up Panera and my little bit on how long you have to wait in even the shortest line there, in the book I contrast Panera with another very similar high-end bakery, Portos. Panera is typically empty for most of its business hours, but during busy hours (and at some stores for most of the day) Panera can enjoy lines that average around five to eight people with maximum lines in the 15-18 range (a fifteen minute wait). (When the lines exceed 10 people, customers typically start walking away.)

    Portos, on the other hand, has — all day long — lines of 20, 30, or 40 people. The average line is just a few people south of 40. During busy hours, the lines can get as long as 90 people long.

    Here’s why: If you are at the end of a 40 person line, it takes about 5-7 minutes for you to get your food and pay (about the length of time it takes you to get your food and pay at Panera in a line of 4-5 people). Through a combination of operational decisions and employees that really kick ass (while smiling broadly and pleasantly greeting (and thanking) each and every customer), Portos is doing ten times (you read that right — ten times) the business each minute than Panera. All day long — there is no empty period. The lines form when they open and don’t stop until they close.

    I did statistical measurements at Panera stores and at Portos — Portos is handling about 35-40 times the customers each day than Panera.

    Do you see? Portos can handle 40 customers in about the same time it takes Panera to handle 4. If you went up to any Panera senior executive and said, “Hey, I will increase your in-store sales by a factor of 40 or more,” do you think you’d get his or her attention? Sure, they can crow about their in-store sales and high rate of growth (and they should of those facts), but are those sales what they should be?

    These guys are measuring in-store sales growth by single digit percentages (and, if they’re lucky, by double digits somewhere south of 20%), while Portos, which has solved the customer wait and customer service problem that plagues Panera, is typically delivering in store sales exponentially greater than the busiest Panera.

    The same applies to Ross. They are doing fine (because they are an ultra-discounter). They have a large customer base that “endures” customer service at places like Ross because they have to. And the recession has put more people in that “endure customer service because you have to” category. But the real question is, how many customers don’t shop at Ross? How many people shop 5 times a year who, if the customer service was evenly minimally adequate, would shop 20 times a year?

    They spend millions per year on advertising, but they’re not willing to spend money and effort raising their customer service to merely adequate levels. I would argue they’re losing more money by failing on customer service than they’re gaining through advertising.

    It doesn’t make sense, but they regard advertising as an expense that brings people into the store. They don’t realize that customer service does the same.

  3. Kat says:

    Oh, I don’t doubt that they *could* make more if they didn’t treat their customers (and employees) like cattle, but the question still remains, why take the risk? If things are “good enough,” why put in the time and energy to change the system? Can you *guarantee* them increased profits? I’m not arguing with your premise, but I’m wondering if fairly successful, but customer-service-challenged businesses will *care* enough to take the chance. I expect WalMart laughs all the way to the bank.

    What/where is Portos? We have Panera here (I’m lucky; Ive never been caught in a long line there, but I’ve never been when it’s overly busy), but not the other. What is their market share? Do they have as many locations as Panera? What’s their profit margin, compared to Panera?

    I guess I’m thinking it all has to do with one’s goals. I know plenty of small businesses that have excellent customer service, decent prices, and…one store. They’re doing well (or not), but they’re not making money hand over fist, by any means. What is important to them? Doing a good job, making a living, maybe having fun?. A corporation, on the other hand, wants market share, geographical spread, high volume. Keep costs down, set up the store/restaurant/whatever, blanket the market, strangle competition with long hours and low prices, then move onto the next market.

    At this stage in our economic history, can we even compare these two models? Sure, that particular Panda Express might lose some customers, but the damn things are in every food court in the U.S., whereas the truly awesome family-run Thai place is in a hole in a corner of the old downtown.

    Sigh, if only mega-corps remembered what human beings were really for, they might overcome their massive inertia to change their business practices, but I’m not too sanguine about it. :-(

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